Medicare … Choices

When people go onto Medicare they are faced with a number of decisions. They will usually get inundated with mail all designed to move them in one direction or another. The problem is that people are not the same. They have different needs, different backgrounds and different ideas as to what is “good”.

A person needs someone who works in this field but is not tied to promoting any one company to assist them in this. This is where independent insurance agents come in (not those working for massive marketing organizations).

Medicare does not work like medical insurance a person may have when under 65. A person has to retrain how they think, because there is virtually no similarity.

The following is a general description of how things work. This is not meant as a legal description, but rather it is meant to make it easier to understand. And specific questions should be asked and the answer not assumed by what follows.

Original Medicare was broken down into two sections:

PART A: Part A you do not pay for (assuming you have the required work credits). For those that do not have this, it costs up to $437 per month. (This is rare). You receive this upon your enrollment in Medicare. I describe it as “Building Insurance”. I call it this because this part pays Hospitals, Nursing Facilities, and other “buildings”.

[The figures shown in this article are 2019 and are adjusted annually].

Under Part “A”, if you go into the hospital you pay an entrance fee (share of cost) of $1,364 dollars. You pay nothing else for 60 days. There is a co-pay of $341 per day for days 61-90. After 90 days, there is a use it one-time benefit for the 91st to the 150th day where your co-pay is $670 per day. See below about why you actually will never pay these charges if you have other insurance.

PART B: Part B you pay $135.50 a month for. Assuming you have Social Security, they deduct this from your check It is optional, however, it would be penny smart and dollar foolish to not opt for this. It is the best buy in insurance. Part B pays “people”. People like doctors, technicians, etc. After a calendar year deductible of $185, it pays 80% of what Medicare approves. Physicians do not have to accept Medicare, but it is rare for them not to. Assuming they accept Medicare, they may not legally charge more than 115% of what Medicare approves. This can add up to quite a lot, but see below for how a person may avoid these charges entirely.

For many years this was Medicare. There was no coverage for prescription drugs, except when a person was in a hospital. Due to the tremendous advantages of new and better drugs, peoples life span improved considerably. Some put this at 15 or 20 years longer than was anticipated at Medicare’s inception in 1965. But with this improvement came costs. Some people were paying out two and three thousand dollars a month in order to stay alive. With this came a lot of political pressure. So when George Bush was President, two “parts” were added to Medicare. This is somewhat a misnomer, but let me explain.

PART C: Part C is prescription drug coverage. It is a misnomer, in my opinion, to refer to it this way, because it is actually administered by private insurance companies under Medicare’s direction. And there are changes to this every single year. You will see that whereas Medicare is a program you can make decisions about and just kind of forget, you cannot do this with Part C. it must be looked at every year.

Prescription drug plans must be selected based on what a person takes in prescriptions. If they take none or only low-cost drugs, then they could opt to purchase a lower cost plan. Plans range from under $30 a month to over $100 a month. This must be evaluated each year, as prescriptions change and drug plans change. It is best to buy a plan because they charge a 1% per month penalty for every month a person has no coverage when they finally purchase it. What often handles is by the time a person thinks they need a plan, they need an expensive plan, and then they will pay a lifetime penalty (which could easily be 60% or more if they were 70 or so when purchasing it). Most of my clients I put on a low-cost plan and then they re-look at this every October (for the following January).

PART D: Part D is also referred to as Medicare Advantage. I also consider this a misnomer because it really isn’t a different part. It is the privatization of Medicare. Although people do not give up Medicare, the Insurance Company handling the Medicare Advantage program takes care of both Part A and Part B (and sometimes Part C). The government pays them to do this (and so does the consumer). I am not a fan of this program, mostly because of how it is implemented. It is done by County. Some (few) Counties it is an option that is worth looking at, but that is not the case in my county, nor in most rural areas. Unless you live in a densely populated area, I would not invest much time in looking at this.

So when going onto Medicare a person needs to choose a Medicare Supplement and a Prescription Drug Plan.

Medicare Supplements are standardized. This means that a plan from Company ABC and Company XYZ are the same plan if they are called by the same name. The names of the plans, believe it or not, are also labeled by letters. There are Plan A, not to be confused by Part A of Medicare, Plan B, Plan C, … Plan N, etc. There are differences in costs and service. This is where an independent insurance agent can advise you best.

There are plans available that are reasonable in cost that pay ALL co-pays, or in some cases, all but one. Others operate with one calendar year deductible and then pays all costs.

If you’d like personal help with this, either before you go onto Medicare or after (there are things that may be done to change decisions you have made), email me or call me. I’m here to help.